Sexton, 27, the hot favourite to wear the Lions No10 shirt in Australia this summer, is an integral part of Ireland’s plans as they build towards the 2015 Rugby World Cup. To lose direct access to such an asset is a blow to the union as well as to last year’s Heineken Cup winners, Leinster, who were knocked out of this year’s competition last weekend.

Sexton’s current deal, reputedly worth in the region of £300,000, expires next summer and it is thought the IRFU was not prepared to offer more than £400,000 as part of a long-standing refusal to engage in auctions with their leading players.

The 27-year-old has been the key to Leinster’s emergence as the leading force in Europe over the last four years – during which time they have won the Heineken Cup three times.

Irish rugby had been immune to the French raiding parties that have wreaked havoc in Wales and which also threatened to destabilise English rugby until the RFU moved to adopt a policy whereby home-based talent is given first consideration.

Sexton is the first high-profile Ireland player to leave since Tommy Bowe joined the Ospreys in 2008 before returning to Ulster this season. Sexton’s move could lead to other top Irish players heading for France.

Racing, whose owner Jacky Lorenzetti is dubbed the Roman Abramovich of French club rugby, are thought to see Sexton as the perfect replacement for Argentina star Juan Martin Hernandez while former Bath fly-half Olly Barkley has also been struggling for game time. Racing have already secured a number of big names for next season, including Cardiff Blues centre Jamie Roberts and Dan Lydiate from Newport Gwent Dragons.

Philip Browne, the IRFU chief executive, said that ultimately it had not been in the “best interests of Irish rugby” to compete in a bidding war to keep Sexton in Ireland. “While we remained in the fight right up until the last possible moment to keep Johnny in Ireland with a very strong offer, ultimately we had no option but to take the decision that it would not be in the best interest of Irish rugby to chase the reported financial incentives being offered. We have always recognised that some of our players will be targeted by overseas clubs with offers which, quite simply, are not within our orbit.”

The uncapped Harlequins lock, Bristol-born Olly Kohn, has been called up to the Wales squad as they look to rectify their injury crisis at second-row. Kohn, 31, who qualifies through his Welsh grandfather, described receiving the call as “surreal”.